The company lowered its outlook for the remainder of the fiscal year, blaming the decline in sales on a slower-than-expected recovery in luxury in mainland China and poor performance in its Asian travel retail business.
These challenges were partially offset by organic net sales growth in the United States and many markets in the Asia-Pacific region led by Japan and Hong Kong, as well as in nearly all markets in the EMEA region led by Germany and China. Stated. England.
Organic net sales of color cosmetics and fragrances increased, partially offsetting the significant decline in skin care sales.
Fabrizio Frida, President and Chief Executive Officer, said: “Encouragingly, fragrances, makeup and skin care all contributed to the return to growth in the US. This performance reflects pressure from Asian travel retail and a slow recovery in overall prestige in mainland China. It partially offset it.”
He continued: “Given the increasing external headwinds, namely the slowdown in the overall growth of travel retail in Asia and prestige beauty in mainland China (which is currently confirmed in the pre-sale phase of the 11.11 Shopping Festival); , given the risk of business interruption in Israel and in other parts of the Middle East as well.”
He also said the following about the company: “We will accelerate and expand our profit recovery plan to deliver benefits in fiscal years 2025 and 2026.”
EMEA sales decreased by -27%
Net sales in the EMEA region were down by almost a third compared to the same period a year earlier, and global travel retail sales were down double digits due to retailers resetting inventory levels.
The company said it now plans to reduce excess inventory, particularly through its regionalized supply chain network across Asia.
Sales in Asia fell 3%, but ELC said this was due to an overall slowdown in luxury in mainland China.
But it wasn’t all bad news, the company said the decline was partially offset by gains in other countries in the region, including Hong Kong, Japan and Australia.
The US market also rose 6%, with increases in both North America and Latin America.
To put things in perspective, ELC’s revenue continues to decline every quarter; Sales in fiscal 2023 decreased by -10%. This was primarily due to a slower recovery in travel retail sales in Asia.
L’Oréal Group has also recently reported declining sales in North Asia, with Beiersdorf’s La Prairie brand also struggling in this market, while L’Occitane Group has reported declining sales in North Asia, with Beiersdorf’s La Prairie brand also struggling in this market. Reported that the market is recovering.
Skin care sales decreased by -21%.Fragrance increased by 5%
Skincare net sales had the steepest decline, down -21%, but ELC attributed this to issues in travel retail in Asia, primarily due to the company’s efforts to reset retailer inventory levels. He said this was due to the measures taken by the retailer.
The report said the decline was also due to “a slower-than-expected recovery in overall prestige in mainland China and headwinds from changes in government and retailer policy related to non-structural market activity.” said.
Sales of the Estée Lauder and La Mer brands decreased, partially offset by growth in The Ordinary and, to a lesser extent, M·A·C.
Makeup net sales increased 1%, with high-single-digit growth in the Americas and APAC, partially offset by declines in EMEA, also a challenge in Asia’s travel retail business The company said that this was due to
Net sales of M.A.C., Too Faced, Tom Ford and Clinique increased, while net sales of the Estée Lauder brand decreased.
Fragrances remain the company’s strength, with net sales up 5%. Le Labo and TOM FORD brands recorded double-digit growth in the Americas and Asia/Pacific.
Haircare net sales declined -7% due to Aveda and Bumble & bumble; “This is mainly due to weakness in North America.”
